Chinese investment in Europe hits 2018 peak as EV ambitions reshape industrial landscape

China's industrial ambitions in Europe have shifted into a higher gear. In 2025, Chinese companies poured 16.8 billion euros into the continent—the largest sum since 2018—and this time they came not merely as exporters flooding markets with finished goods, but as builders of factories, acquirers of companies, and architects of supply chains. The surge was driven almost entirely by one sector: electric vehicles and the batteries that power them.

The numbers tell a story of deliberate concentration. Of the 16.8 billion euros invested, 7.6 billion went to automotive manufacturing alone, a 46 percent jump from the previous year. Within that, battery production consumed 93 percent of the capital. CATL, China's dominant battery maker, is constructing a massive plant in Figueruelas, near Zaragoza, in partnership with Stellantis. CALB is building in Portugal. Gotion chose Slovakia. These are not small operations. They represent a strategic repositioning of Europe's industrial base, with Chinese firms establishing themselves at the heart of the continent's energy transition.

Yet the picture is more complicated than simple investment. Chinese exports to Europe simultaneously grew 9 percent in value during 2025, with battery shipments up 43 percent and electric vehicles up 15 percent by value—though 29 percent by unit count. The companies are not replacing their export strategy with investment; they are layering investment on top of it. They are entering European markets through both doors at once: selling finished products while also building the factories to produce them locally. Brussels watches this with visible unease. The concern is not that Chinese money is flowing in, but that it flows in on terms set by Beijing, with supply chains, technology, and competitive advantage remaining firmly under Chinese control.

Spain has positioned itself as a willing partner in this arrangement. The country attracted 1.5 billion euros in Chinese investment in 2025, making it Europe's fifth-largest recipient after Hungary, Germany, France, and the United Kingdom. More than a third of that came from a single transaction: China Three Gorges, a state-owned energy giant, acquired a solar plant in Mula. But the real prize is the battery sector. Chinese investment in Spanish electric vehicle supply chains grew 147 percent year-over-year, reaching 642 million euros. Spain is now the third-largest hub for Chinese EV investment in Europe, behind Hungary and Germany.

The Spanish government has actively courted this capital. Prime Minister Pedro Sánchez has traveled to China four times since 2023. The Spanish royal family was received in Beijing in November. These visits have yielded tangible results—the investment flows are real. But they have also raised questions about the terms on which Spain is welcoming Chinese industry. When CATL began construction at Figueruelas, more than 2,000 Chinese workers arrived for the building phase. The company says the proportion of Chinese staff will drop below 10 percent once operations begin, and that it plans to employ up to 4,000 people total. The promise is there. The proof is not yet.

Spanish Vice President Yolanda Díaz traveled to Beijing last week to attempt to establish clearer ground rules. Speaking at the Fourth Global Summit on Trade and Investment Promotion, she welcomed Chinese capital but insisted it reach its "maximum potential" only when it generates "quality local employment, transfers knowledge, and takes root in the industrial fabric of the receiving country." She raised the issue of worker training with executives from CITIC, AgiBot, Geely, and SAIC. The message was diplomatic but firm: investment is welcome, but not on any terms.

Brussels faces a genuine dilemma. European officials want the capital, the factories, and the jobs that Chinese investment brings. They also want to protect European industry from being hollowed out and reassembled under foreign control. Some EU tools—like the Foreign Subsidies Regulation—are beginning to weigh on Chinese calculations, according to analysts at Rhodium Group and the Mercator Institute for China Studies. But those same tools risk pushing investment elsewhere. Morocco, Turkey, and North Africa are becoming increasingly attractive to Chinese firms, offering lower costs, proximity to European markets, and sometimes preferential access to EU trade. The risk for Europe is fragmentation: if Brussels tightens rules too much, member states will compete to relax them, and Chinese capital will simply flow toward the most permissive jurisdictions. If Brussels loosens them too much, European industry may find itself subordinate to Chinese supply chains operating on European soil. The balance is precarious, and Spain's role in tipping it one way or the other remains to be seen.